Draft International Development Association (Fifteenth Replenishment) Order 2008

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The Chairman: In the absence of any other Member wishing to speak, I call the Minister to reply to the debate.
2.50 pm
Mr. Malik: A question was raised by the hon. Member for West Chelmsford and reiterated by the hon. Member for Berwickshire, Roxburgh and Selkirk. I will write to them in more detail, but one of the challenges was that the HIPCs did not qualify in the way that we expected. Another element in the equation was exchange rates, and a third was payments only made as due. I will write in more detail to both hon. Gentlemen.
The hon. Member for Berwickshire, Roxburgh and Selkirk asked whether this was a new phase covering 2016 to 2019. The answer is yes. DFID responded to all the IDC recommendations and I can obviously provide Members with a copy. DFID welcomed the report and broadly accepted most of the recommendations.
The update on the executive director is that one has been appointed and will take up the post in September. The hon. Member for North-East Milton Keynes asked me about the IDA contribution level and the percentage of DFID’s budget. As the Committee will be aware, DFID received a large increase through the comprehensive spending review. The proportion of its budget going to IDA is the same under this CSR, but we have had to take into account a number of factors.
Mr. Burns: As the Minister will appreciate, one of the crucial parts of the whole equation behind these two orders is the SDRs. Could he share with the Committee the exact basis for the value of SDRs?
Mr. Nicholas Soames (Mid-Sussex) (Con): Write to him!
Mr. Malik: That is a splendid idea. Why not do that?
Mr. Burns: May I intervene again?
Mr. Malik: No. I think I will make some progress and respond to other questions—[Interruption.]
The Chairman: Order. It is up to the Minister to accept or reject interventions. I thought that the suggestion made by the hon. Member for Mid-Sussex was helpful. I think the whole Committee would welcome that response.
Mr. Malik rose—
Mr. Burns: Will the Minister give way?
Mr. Malik: I will gladly give way again.
Mr. Burns: I appreciate the Minister’s helpful offer to write to me. However, given the context in which we are discussing the orders, it would be for the benefit of the Committee if he could answer that question so that we could have greater understanding and clarity.
Mr. Malik: At a very basic level, SDR is a basket of currencies, which are looked at in each replenishment round. I hope that gives the Committee a quick understanding of how SDR comes about. If more detail is required, I will be happy to provide it.
On the question how DFID decided on its contribution of £1.3 billion, as with any such spending decision, a wide range of factors is considered and assessed before a final contribution is decided. In this instance those included the contribution that the institution could make to achieving the MDGs with different resource levels, the role that the institution plays in the international system, the level of financing provided by other donors, the reforms that our finances can bring about, and other possible uses of resources. Decisions on our negotiating priorities and on the level of our contribution were informed by views from DFID teams on the effectiveness of the World Bank, including in-country.
Mr. Lancaster: Will the Minister give way?
Mr. Malik: I am about to respond to the hon. Gentleman’s point, so he may not need me to give way. No cost-benefit analysis is available for public consumption in the sense in which I think he requested it.
Mr. Lancaster rose—
The Chairman: Order. The Minister has had two notes that he has missed. They might help him in answering the other points.
Mr. Lancaster: DFID is enjoying an increased budget, heading towards 0.7 per cent. There is a general feeling that the Department sometimes takes the easy option of increasing spending via multilaterals because that is a relatively straightforward way of spending that money, rather than looking at other potential avenues where the money could be spent. I seek the Minister’s reassurance that a basic cost-benefit analysis was done before the amount of money was decided. The answer is a straightforward yes or no.
Mr. Malik: I have already explained that we carried out an internal analysis, and what its elements were. Our approach to multilaterals as we move forward is best described as “multilateralism with edge”. That means that we will invest in multilaterals that we believe are effective, and invest less in those that we believe are less effective. The World Bank, according to the Easterly review carried out a few months ago, is the most effective international development body out there.
Mr. Lancaster: I am grateful to the Minister, who is being very generous. Given that he says that the cost-benefit analysis was carried out, why is it not in the public domain? In this era of openness about public spending—about DFID spending—why does he refuse to put that analysis in the public domain?
Mr. Malik: I have just explained that we carried out our analysis. At the end of the day it is a judgment call by Ministers. That is what dictates the outcome.
Decentralisation has been a matter of concern. We believe that it will be make IDA more efficient, relevant and effective. Decentralisation is key to ensuring effective implementation of the Paris declaration on aid effectiveness, including enhancing country ownership, aligning behind Government plans and, of course, harmonisation. We have pushed the World Bank on decentralisation, with some results. By the end of the current year the number of staff in Africa in country will increase by 50 per cent., and, importantly, all new international staff for Africa will be based there.
The hon. Member for Berwickshire, Roxburgh and Selkirk asked about the MDRI. Payments are made as they become due, and we pay only what is needed. Expenditure is recorded in DFID publications. We can provide details of that later.
Mr. Moore: The order represents a fairly significant change in the arrangements by which the Government pay over the amounts. I understand that in the past the Minister would come to the House every time there was a request for the payment from the organisation. Now payment can be made on account at any time. Will the Minister not be a wee bit more forthcoming about how the House will get information about those payments as they go along?
Mr. Malik: I have given my initial response. I have some sympathy with the hon. Gentleman’s perspective and I will—[Hon. Members: “Write to him!”] I will consider the best way to give him and other Members comfort on that issue.
Mr. David Winnick (Walsall, North) (Lab): I am listening attentively and think that my hon. Friend the Minister is giving a very comprehensive response. There has been sniggering from Opposition Members about responding in writing. However, some detailed and technical points are being raised and I see no reason why my hon. Friend should not reply in that manner. If he does reply in writing, I hope that he will write to the rest of the Committee, but I do not see any reason why he should keep in his head all kinds of technical details. Otherwise, what is the point of having senior civil servants in his Department? [Interruption.]
The Chairman: Order. Mr. Shepherd, if you would like to make an intervention, I am sure that the Minister will be pleased to take one from you. However, it might be better if you got up off your chair, rather than intervening from a sedentary position.
Mr. Richard Shepherd (Aldridge-Brownhills) (Con): I hope that the Minister will respond to his colleague. We are interested in the matter and expect a detailed explanation on the points raised, but we are going to be asked to authorise the orders. This is about public money. This is extraordinary: there should have been better preparation and the questions should be answered. The Minister is accountable to the Committee for the purposes of the debate and we are entitled to a full explanation.
The Chairman: Thank you for taking that intervention, Mr. Malik.
Mr. Malik: Always a pleasure.
Mr. Malik: I am not surprised at all that my hon. Friend the Member for Walsall, North and my right hon. Friend the Member for Coatbridge, Chryston and Bellshill have shown the eminent common sense for which they are respected in the House.
Mr. Winnick: Will the Minister give way?
The Chairman: Order. Not if you are going to dispute that point, Mr. Winnick.
Mr. Winnick: Mr. Hancock, I certainly would not want a dispute with you because 24 years ago, almost to the day, I was trying to stop you coming here.
Does the Minister agree that my right hon. Friend the Member for Coatbridge, Chryston and Bellshill is one of the most experienced Members in dealing with overseas development? He has contributed much of his parliamentary time over many years to that worthy cause and his word should be taken with due seriousness.
The Chairman: Order. Before we have too many emotional tributes to the experience of the right hon. Member for Coatbridge, Chryston and Bellshill, I should ask the Minister to stick to the business before us, rather than Mr. Clarke.
Mr. Malik: Just one sentence, Mr. Hancock. I agree with my hon. Friend the Member for Walsall, North that there is no doubt that nobody is more respected in the House on these issues than my right hon. Friend the Member for Coatbridge, Chryston and Bellshill.
I shall move on to debt sustainability. It is clear that lenders and borrowers need to play their part in ensuring that poor countries do not build up new debt burdens. The debt sustainability framework of the World Bank, the IMF and the African Development Bank guides decisions on new lending. The banks use DSF to determine the best way to provide assistance to the poorest countries. If a country risks acquiring too much debt, assistance will be provided in the form of grants or, in some cases, a mixture of grants and loans.
On the question about the adjustments to the MDRI, these are made every three years in line with the replenishment for IDA. We will need to return to Parliament in three years to seek assurances over IDA 16 disbursements. I am quite surprised by the heat that is coming from Opposition Members. One would think that they were unaware of that and completely opposed to the process. There is a cross-party agreement on where we are. Opposition parties have been consulted constantly along the way. This just seems like cheap political point scoring.
Mr. Burns: Will the Minister give way?
Mr. Malik: No, the Minister will not give way.
I should like to explain why the cost-benefit analysis is not public to give a bit more comfort to the hon. Member for North-East Milton Keynes. We have published our response to the International Development Committee, setting out how we make financing decisions. There is an annual report to Parliament on the UK’s overall relationship with the World Bank. We have appeared before the IDC and discussed its views on the bank in detail. The institutional strategy paper setting out a vision for the bank has been published and we will be publishing a new institutional strategy paper next year, which I hope will deal with many of the concerns—legitimate or otherwise—that have been raised.
On the question whether money is being spent at the World Bank because it is convenient, I have already said that the answer is no. I have given good reasons why we are spending there. All the actors in the international development field agree that the World Bank is the most effective institution in this area of work.
On the impact of civil society organisations, I have no doubt that they are crucial in the fight against poverty. That is why between now and 2010-11, DFID will increase the amount that we utilise on civil society organisations, both in the south and at home, by some 55 per cent., which is greater than the growth of spend within DFID.
We also have regular discussions with civil society organisations about their views on IDA, and on IDA 15 replenishment in particular. Civil society organisations were also able to comment on the deputy’s conclusions in draft before they were agreed. They also met all IDA representatives during replenishment, so their views were taken into account.
I think that I have dealt with most of the questions that were raised. DFID completely agrees with the IDC, which has stated that:
“The World Bank is a vital component in the international development system. The Bank is a major provider of development funding, analysis and advice. Its lead is often followed by other donors and agencies.”
I have repeated that quotation because it is crucial, given the number of times that the IDC is cited in these discussions. The pledged UK contribution to IDA 15 takes into account this vital role and is in keeping with our commitments to increase aid through effective institutions. The MDRI has been a great success, delivering a significant amount of debt relief in a relatively short space of time. We must keep the promises that we made to poor countries in 2005 through the G8, and continue to work to ensure the full financing and implementation of the MRDI. The MDRI could deliver over $50 billion of debt cancellation if all remaining HIPCs qualify. I will end on that note. I hope that I have done justice to hon. Members’ questions, and I thank them for their support.
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